Europe Jumps After EU Says It May Consider Bank Recapitalizations

According to Bloomberg, the European Union is now open
to direct recapitalizations of European banks through the
European Stability Mechanism—the permanent European bailout fund
set to go into effect this summer.

This openness to direct bank recapitalizations comes from the
European Commission, in policy recommendations released today.

While this change in policy response marks a significant
departure from the Commission's current crisis response, it is
important to note that the language remains tentative and that
this does not imply support from German Chancellor Angela Merkel or other EU leaders.

The Commission has long considered eurobonds a viable crisis
solution, to the chagrin of Germany, Finland, Austria, and the
Netherlands.

That organization said that direct recapitalizations from the ESM
"might be envisaged" in order to "sever the link between banks
and the sovereigns."

Check out the euro versus the dollar just after that headline
came out: